(Adds Hamas spokesman)

By Wafa Amr

RAMALLAH, West Bank, Nov 5 (Reuters) - Hamas and Palestinian President Mahmoud Abbas's Fatah have agreed in principle to form a unity government that will not be headed by current Prime Minister Ismail Haniyeh of Hamas, officials said on Sunday.

The apparent breakthrough in settling internal Palestinian political differences came as Israel kept up a military assault on northern Gaza aimed at halting militant rocket fire at the Jewish state. Israeli forces have killed at least 48 people, more than half of them gunmen, during the five-day operation.

The Hamas Islamist movement took office in March after beating Fatah in parliamentary elections.

It has struggled to govern under a Western embargo imposed over its refusal to recognise Israel, prompting efforts to form a unity cabinet that Palestinians hope will ease the sanctions.

"We have agreed on the political platform of the new government," Hamas lawmaker and senior leader Yahya Moussa told Reuters. "The Hamas movement has also agreed that the next prime minister will not be Haniyeh."

"The choice has been made for the next prime minister," Moussa said. "His name will be presented to President Abbas. A joint committee will be formed to appoint the portfolios and to finalise other details."

Mustafa Barghouthi, an independent lawmaker who has been mediating between Hamas leaders and Abbas, confirmed a tentative deal had been made.

"There is approval to form a new government headed by a new prime minister," he said. "We are preparing for a meeting between President Abbas and Prime Minister Haniyeh very soon."

Fawzi Barhoum, a Hamas spokesman, was less upbeat.

He said an agreement was "imminent", but that important details would have to be worked out by Abbas and Haniyeh. He did not elaborate, but said Hamas would have the right to form the cabinet and the right to name the prime minister under any deal.

An earlier deal to form a unity government collapsed weeks ago, deepening a power struggle and raising fears of civil war.

The main stumbling block has been agreeing the new government's stance toward Israel. Barhoum reiterated the Hamas movement would never recognise Israel.

Some officials said Abbas was expected to meet Haniyeh in Gaza on Monday. However, in a sign of possible problems, an official in Haniyeh's office said a news conference the prime minister planned would not go ahead due to "technical reasons".

GAZA OFFENSIVE

In Gaza, Israeli forces killed four Palestinian militants and a police officer, residents and medical officials said.

Prime Minister Ehud Olmert said Israel's assault on rocket-launching squads and gunmen would not be open-ended but declined to say when it would finish. He appeared to acknowledge the rocket threat could not be wiped out by the operation.

Several homemade missiles fired by Palestinian militants in Gaza hit southern Israel. No one was hurt.

"We have no intention of conquering Gaza," Olmert said at the start of a cabinet meeting in Jerusalem.

The operation, mainly focused on the town of Beit Hanoun, is one of the biggest since Israel's army and Jewish settlers were pulled out of Gaza last year after 38 years of occupation.

It is part of a wider offensive launched in late June after militants, including members of the governing Hamas movement, abducted an Israeli soldier in a cross-border raid from Gaza.

Saeb Erekat, a senior aide to Abbas, accused Israel of "war crimes".

Since the start of the overall offensive in late June in Gaza, 320 Palestinians have been killed, around half of them civilians. Three Israeli soldiers have been killed.

(Additional reporting by Nidal al-Mughrabi in Gaza)

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